TaxTMI 
TaxTMI 
2016 (2) TMI 1281
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....started such powers on the basis of attention drawn by the ward officer. Therefore, the order passed is bad in law. 1.2 In starting the proceedings on the basis of AO's report and also erred in remanding matter to the AO again, therefore, there is no such independent application of mind. Therefore, the present order passed in bad in law and liable to be quashed. 2. In not appreciating the facts that the AO has completed the assessment only after satisfying himself on the points raised during assessment proceedings and after considering the detailed reply filed by the appellant before him and, therefore, the CIT has no jurisdiction to invoke the revisionary powers u/s.263 of the Act. 2.1 In not appreciating the facts that the AO after examining the details has adopted a possible opinion on the several points raised in the show cause notices issued by him and, therefore, the CIT lacks jurisdiction to invoke s.263 and he cannot seek to impose his own erroneous opinion on those facts to pass such an order. 2.2 The CIT also erred in passing the order u/s.263 even after perusing the detailed reply filed by the appellant and, therefore, the revision....
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.... the order passed by CIT without rebutting the objections is bad in law and liable to be quashed. 6. In not appreciating the fact that, assessee has submitted various replies alongwith bank statements and also invoices PAN, Addresses of all the purchase parties in various box files and therefore, even on merits, the order passed by CIT is liable to be cancelled. 2. The brief facts of the case are that the assessee-company filed its return of income for the year under consideration on 26.09.2010 declaring total income of Rs. 59,07,546/-. The same was selected for scrutiny; accordingly, the Assessing Officer passed the assessment order u/s. 143(3) of the I.T. Act determining total income at Rs. 87,89,730/- on 30.03.2013. A proposal u/s.263 dated 16.07.2014 was received in the office of CIT-2, Surat from ACIT, Circle-4, Surat through the Jt.CIT, Range-4, Surat vide letter No.SRT/JCIT/Range-4/263/2014-15 dated 18.07.2014. The concerned Assessing Officer in the proposal has submitted that various issues remained to be verified during the course of assessment proceedings which had made the order erroneous in so far as it was prejudicial to the interest of revenue. For the sam....
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....e erroneous and prejudicial to the interest of revenue. 4. During the course of assessment proceedings, it was noticed that Awdhesh International and Harsh Fashion had done job work for assessee company of more than Rs. 25 lakhs each. The A.O. had issued notices u/s.133(6) of the Act to these parties but replies were not received from both the parties. The A.O. had brought this fact to the notice of the assessee and asked it to submit the original bills of each and every transaction. The assessee did not submit the bills. Despite the fact that the notices u/s. 133(6) remained un-served and even assessee did not submit the copies of bills, the A.O. accepted the claim of payment on account of job work charges. This has resulted in the assessment order to be erroneous and prejudicial to the interest of revenue. 5. The company has given loan to Murli F. Sawlani and Harish F. Sawlani who have 10% share holding in the assessee company. The A.O. has not examined whether the provisions of section 2(22)(e) of the I. T. Act are attracted on this transaction. 6. I, therefore, propose to pass an order u/s. 263 of the Act so as to set-aside the assessment order passed....
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....re the then Assessing Officer in reference to show cause notice dated 18.03.2013 and also various papers mentioning relevant para, which was filed before the Assessing Officer along with copies of invoices, confirmation etc. 6. It is said that it is not case that the Assessing Officer has not raised any query in reference to so-called purchases inter alia in reference to applicability of section 2(22)(e). In fact, the specific query was raised and has been fully complied and thereafter after having satisfaction by the then Assessing Officer, he has not issued another show cause notice requiring further details to be submitted by the assessee, and therefore, we say that touching the same issue by way of revision is amount to change of opinion and same cannot be permitted. 7. It is said that, all the parties from whom the assessee has made purchases are assessed to tax and their books arc also audited. 8. That, as alleged in your notice para 2, you have stated that the notice u/s. 133(6) has been returned unserved in reference to party number 1,4,6,8. This issue has already been raised by the AO in his notice dated 18.03.2013, para (iv) and the query has al....
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....andatory to inform to the assessee, regarding any inquiry done, Now Your Honour wants to make the revision of the order, on the ground that, there was some enquiry made and party has not responded is not a ground to apply sec. 263. Without prejudice, we hereby enclose copy of account, bank statement and Income Tax Return of these two parties, as we have collected. Kindly also refer Para (xiii) of this letter wherein we say that without prejudice, only profit element is required to be taxed. 12. Now regarding para 5 of your notice, in reference to sec. 2(22)(e), we beg to submit as under: 12.1 The query raised by you is in reference to, Murli F. Savlani and Harsh F. Savlani, copy of account of both the parties arc enclosed herewith alongwith shareholding list from which it is found that Shri Murli, F. Savlani is having 9.77% shareholding and Harsh F. Savlani is having 9.94% and, therefore, the provision of sec. 2(22) (e) not applicable. A copy of the account of above both shareholder along with the shareholding list is enclosed herewith ". 2.3 On perusal of the written submission, the CIT observed that a survey u/s. 133A of the Act was conducted on the assessee ....
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....o be debited in their profit and loss account by the concerns casts doubt about the genuineness of the transactions undertaken by these concerns. These concerns have not shown any transportation/octroi/delivery expenses. In reply, to the question No. 18 in his statement recorded u/s. 131 on 01.08.2011, Shri Murli Fatandas Sawlani had stated that: "It is the responsibility of the supplier to provide us the goods at our premises. The charges of the transaction are to be borne by the supplier himself. We have received the copy of challans as a proof of delivery of goods at our premises. So, there is no requirement for us to keep the copy of truck/lorry receipt." 2.4 It is thus seen that neither the purchaser nor the seller has shown any transportation/octroi/delivery expenses. None of these concerns have shown any opening or closing stock in their statement of account filed with their return of income for A.Y.- 2010-11. None of these concerns have disclosed any bank A/c. in their Return of Income. Very negligible expenses have been debited by these concerns and whatever little has been debited is on account of salaries and wages/conveyance expense/audit fee/other expenses.....
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....w cause notice dtd. 18.03.2013 issued by the Assessing Officer. With regard to Job-work payments made to Avdhesh International and Harsh Fashion, nothing was found on record in support of genuineness of the transaction despite notice us/s. 133(6) issued to these parties. Further, in the case of the Shri Laxmi Tex Prints Pvt. Ltd., only two bills were on record while the job-work expenses debited in the name of this party was Rs. 1,21,20,767/-. Therefore, the CIT observed that the action of Assessing Officer in completing the assessment u/s. 143(3), despite the parties failed to comply with the notice u/s. 133(6) issued to them, despite the assessee failed to file the details in compliance to the final show cause notice and despite there being no documentary evidence submitted by the parties or assessee to establish the genuineness of these transaction, has resulted the assessment order passed u/s 143(3) on 30.03.2013 erroneous in so far as it is prejudicial to the interest of revenue. 2.6 Considering the narrated facts and circumstances, the assessment order passed u/s. 143(3) on 30.03.2013 by the Assessing Officer was found to be erroneous in so far as it is prejudicial to the ....
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....company has made purchases from eight parties as discussed above. The total purchases made from these parties amount to Rs. 23.38 Cr. From the Survey Report, impounded documents, bank A/c., statement recorded, it was found that all these parties were the family concerns of Shri Shailesh Damor, an employee of the assessee company and these concerns had all given the same address which was 56, Poonam Nagar Society, Bhatar, Surat. During the course of survey, purchase bills were impounded vide files marked SEL-I to XIV. Furthermore the bills of these concerns were not having Sales Tax Number, VAT Number and GST Number. There were no transportation bills/lorry receipts/ delivery challans for good purchased from these concerns. These parties have sold goods only to the assessee company and to no other party. The total sales shown by these parties are the purchases shown by the assessee from these concerns. In other words these concerns have sold goods only to the assessee company in A.Y. 2010-11, 2011-12 & 2012-13. These concerns have debited negligible VAT/Sales Tax compared to the sales shown in their return of income. The Departmental Representative submitted that in Gujarat VAT/ST i....
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....order u/s.263 dated 30.03.2015. If the recommendation would not have received from the successor- Assessing Officer, then the CIT would even not have initiated the proceedings u/s.263. Therefore, it could not be termed that the CIT himself has called for the records. In this case, the record has been called for only after the recommendation received from the successor Assessing Officer. In similar situation, the ITAT, Mumbai "A" Bench in the case of Ashokkumar Shivpuri vs. CIT, dated 07.11.2014, in ITA No.631/M/2014, held that the revision proceedings simply on the basis of proposal from the Assessing Officer is not valid, because section 263(1) says that "the Commissioner may call for and examine the records of any proceedings under this Act, and if he considers...." which means that proposal for initiation of revision proceedings must be initiated by the CIT. It is the CIT who has to call for and examine the records; but in the instant case the proposal came from the Assessing Officer and on receipt of the proposal, the CIT initiated revision proceedings, which is not justified as held by the Mumbai "A" Bench of ITAT in the case of Ashok Kumar Shivpuri (supra). For the sake of co....
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.... assessee. CIT did not consider the submissions of assessee. CIT has to deal with each and every objection and come to an objective finding. Failure to follow the above procedure would amount to failure of natural justice. In this background, in the case of Orient (Goa) Ltd (supra), it was held that the CIT was not justified in assuming revisional jurisdiction under s. 263. In the case before us the CIT has not taken into consideration the objection dated 09.02.2015, filed on behalf of the assessee, as enclosed in the paper-book page 28 to 33. Further, the CIT has applied section 263 merely on the basis of survey proceedings u/s 133A conducted on 11.07.2011 though the order u/s 143(3) subjected to revision dated 30.03.2013. The CIT's order is based only on same survey proceedings, but those findings were not found in place in the show-cause notice issued to him. The Assessing Officer has completed the assessment only after satisfying himself on the points raised before him during the assessment proceedings and after considering the detailed reply filed by the assessee before him and therefore, the CIT has no jurisdiction to invoke the revisionary powers u/s 263 of the IT Act, 1961.....
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....ing Officer while passing the order u/s.143(3) dated 30.03.2013. The survey folder and also loose papers files were already available to the Assessing Officer at the time of passing the order u/s. 143(3) and only thereafter he has called for certain details and confirmation from the so-called disputed parties. Thereafter, at his wisdom and after making satisfaction and after verification of PAN online took certain views. Moreover, he also issued summons to two parties to whom the assessee has paid job work. Therefore, it cannot be said that the Assessing Officer was unaware regarding survey proceedings and no enquiry has been made by him at relevant point of time. 5.4 The Commissioner may call for and examine the record of any proceeding under this Act, and, if he considers that any order passed therein by the concerned Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The CIT may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or....
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....e either by accepting the accounts or by making some estimates himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and, left to the Commissioner, he would have estimated the income at a higher figure than the one determined by the Assessing Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Assessing Officer has exercised the quasijudicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that, in the opinion of the Commissioner, the order in question is prejudicial to the interest of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, namely, the order is erroneous, is absent. Similarly if an order is erroneous but not prejudicial to the interest of the Revenue, then also the power of suo motu revision cannot be exerc....
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.... bank account of assessee. During course of assessment proceedings, issue relating to investment made by assessee in construction of function hall was examined by the Assessing Officer and explanation of assessee in respect of source of investment with reference to entries made in his two bank accounts maintained with IndusInd Bank and State Bank of Hyderabad was partly accepted and partly rejected by the Assessing Officer and addition on account of unexplained cash deposits was made in respect of bank account in State Bank of Hyderabad. The CIT invoked jurisdiction u/s 263 on ground that there was failure on part of the Assessing Officer to make necessary verification regarding the deposits made by assessee in his bank account with Indus Ind Bank, and the assessment made by the Assessing Officer was erroneous as well as prejudicial to interests of Revenue and assessment order passed by Assessing Officer was set aside. In appeal, the Tribunal held that the entries in bank account of assessee maintained with IndusInd Bank were not only considered by the Assessing Officer, but source of deposits found to be made in said bank account as explained by assessee as the money received by h....
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....ce, it could not also be said that the order passed by the Assessing Officer was prejudicial to the interest of the Revenue. These ratios help the case of the assessee before us. In the case on hand, it is not the case of no inquiry but it is a case of inadequate inquiry, because all details with regard to the purchases were filed before the lower authorities, as held by the Hon'ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd, reported in (2011) 332 ITR 167 (Del). Since all the parties are assessed to tax, inquiries were made, confirmations were filed and the order was passed u/s 143(3) after considering the survey report and other material; in such situation invoking provisions of Section 263 of the Act are not justified. 5.7. With regard to job charges, Avdhesh International and Harsh Fashion, inquiries were made u/s 133(6), but no original bill was found. In fact, bills were seized during the course of survey proceedings as per submission dated 22.03.2013. Both the parties are assessed to income-tax. So absence of original bills, which were lying with revenue at the relevant point of time, cannot be the sound basis for invoking provisions of Section 263 of the Ac....
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....no inquiry on the part of the Assessing Officer. It may be a case of inadequate or insufficient inquiry with the angle of CIT, which cannot be the base for invoking provision u/s 263. The ld. Departmental Representative has also placed on reliance on the decision of Hon'ble Delhi High Court in the case of Gee Vee Enterprises vs. ACIT, 99 ITR 375 (Delhi), wherein it was held that the Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the ITO should have made further inquiries before accepting the statements made by the assessee in his return. The position and function of the ITO is very different from that of a civil court. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. In the case before us, it is not the case of no enquiry, but may be the case of inadequate inquiry, which is not sound basis of invoking provisions of Section 263 of the Act. The other decision relied upon by the Departmental Representative is the judgment of Hon'ble Gujarat High Court in the case of Adani Agro (P) Ltd vs. DCIT, 32 tax....